Sep 07, 2021 16:08:00

What is Amazon's way of making a lot of money on AWS?

Amazon Web Services (AWS), a cloud computing service developed by Amazon, has been adopted by companies all over the world and has gained a wide market share. Amazon has not disclosed how it is making a profit on AWS, but CNBC, a news media, has summarized the 'profit mechanism' used by Amazon in its own research.

How Amazon Web Services makes money: Estimated margins by service
https://www.cnbc.com/2021/09/05/how-amazon-web-services-makes-money-estimated-margins-by-service.html

According to Amazon's second quarter 2021 earnings report, AWS revenues increased 37% year-on-year to $ 14,809 million and operating profit increased 24% year-on-year to 4.1 billion. It is 93 million dollars (about 459 billion yen). This operating profit of 4,193 million dollars accounts for more than half of Amazon's total operating profit of 7.7 billion dollars and 2 million dollars (about 843 billion yen), and it turns out that AWS is Amazon's main division increase. You can check the details of the 2021 Q2 financial report in the following article.

Amazon's second quarter 2021 sales fell short of market expectations and growth slowed, but AWS and advertising were strong-GIGAZINE

Starting in the first quarter of 2015, Amazon began publishing AWS revenue in its earnings reports. However, the profit structure of AWS is difficult to understand because the revenue for each service belonging to AWS is not disclosed. So CNBC interviewed a number of experts and summarized how AWS is profitable.

According to Corey Quinn , chief cloud economist at Duckbill Group , a service that teaches companies how to reduce AWS costs, 50% of AWS revenue comes from the virtual server construction service Amazon Elastic Compute Cloud (Amazon EC2). ) ”.

Amazon EC2 users can choose an instance with different hardware and software configurations, but there was only one instance right after the Amazon EC2 service went live. Amazon is actively expanding the instances by adding instances that can use macOS and adding instances that adopted the original processor 'AWS Graviton 2', and there are more than 400 types of instances at the time of article creation. doing. CNBC focuses on instances that use Amazon's own processor, among other instances, and points out that 'Amazon can reduce costs by using its own processor.'

Spec comparison table of AWS instance 'M6g' adopting Amazon's original ARM processor 'Graviton 2' will be released --GIGAZINE

Amazon also benefits a lot from cloud storage services such as Amazon Simple Storage Service (Amazon S3) and Amazon Elastic Block Store (EBS). 'Some Amazon S3 users use hundreds of petabytes to a few exabytes of storage,' said Mai-Lan Tomsen Bukovec , vice president of storage services at Amazon. It is appealing.

According to David Friend, CEO of wasabi , a cloud storage service that appeals that it is cheaper than Amazon S3, transferring data stored in Amazon S3 to other services will incur very high charges. As a result, many users claim that they will continue to use Amazon S3.

Amazon has a mechanism called the Amazon Marketplace, which allows companies other than Amazon to sell products using the Amazon sales page. Similarly, AWS has a mechanism called AWS Marketplace that allows you to sell web services developed by companies other than Amazon on the AWS platform. On the AWS Marketplace, Amazon can get a commission every time another company's web service sells, just as Apple and Google get commissions on their app distribution platforms. An analyst valuing Amazon's stock said, 'The operating margin on AWS Marketplace is likely to be well above the 30% margin on AWS as a whole,' said AWS Marketplace. It points out that it plays a role in.